Lululemon is a well-known sportswear company for yoga wear founded in Vancouver in 1998. In addition, lululemon also provides designs for running, cycling, training and other sweat pursues for both men and women. The company has branches in the US, Australia, New Zealand, Canada, England and Singapore. Besides selling online and offline, the company also sells the products through channels such as health clubs, sports fitness centers, and yoga studios.
About 99% of lululemon products are mainly produced from Southeast Asia, South Asia, China and other countries. Only 1% of the company’s products are manufactured in North America.
The business strategy of the company is aimed at lifestyle enjoyment and high product costs. Lululemon sportswear is designed not only for exercise but also as a fashion choice for everyday wear. Lululemon focuses on 5 most important business strategies to stay on top of the market: Targeted user group, Product quality, Mindset/community, Marketing, Limited Edition Products. In this document we also discuss about the challenges that Lululemon may face in future.
Initially lululemon only offered yoga pants for women. Then the company expanded to other subjects like men, women and girl . The company also aims to segment customers between the ages of 18 and 35 with high income, ranging from between 80,000 USD and 250,000 USD. Lululemon targets customers with a healthy lifestyle, interested in technology and fitness products. Products reach customers through three main channels including corporate-owned retail stores, direct to consumer sales, as well as wholesale, and smaller channels including franchise, and a few other ways. Within the strategic sales section of the company there are three programs implemented, those being wholesale, yoga hard goods, and team programs. Lululemon’s team program is implemented to develop long lasting relationships with athletic teams, fitness facilities, and yoga studios that are improving their communities by being a stand out example for health and fitness. Another attempt at differentiating themselves is with the Sweat Collective. Sweat collective is a community built from the world’s sweatiest leaders. These members must be active “leaders of sweat” within their community, this includes group fitness studio instructors, run club leaders, personal trainers, and professional athletes or Olympic athletes. Lululemon finds what customers are passionate about, how they like to work out and sweat, and help customers celebrate these goals that they have set for themselves. Not only does Lululemon sell products but they also work closely with and within communities. Often the company will host free yoga classes and meditation whether it be in the studio/store or in an open public area.
Lululemon wants to be more than just a store to consumers but a sense of community that consumers want to be a part of. Although Lululemon is a worldwide company North America makes up for almost 95% of its sales. With this high percentage it is safe to say that America would be its main target market. According to the Center for Disease Control and Prevention, approximately 51% of people of the ages of 18 and older were found to meet the physical activity guidelines for aerobic physical activity as well as 21.7% meeting the physical activity guidelines for aerobic and muscular strengthening physical activity. The main statistic to make note of is the percent of Americans making more than 90,000 USD per year that exercise is 54.3%. This would be Lululemon’s main target market. With the percentage being greater than 50% Lululemon is reaching a fairly large number of people. 56% of Americans make 75,000 USD or more per year and are considered upper-middle class and upper class. Of this percentage 24% of Americans are between the ages of 18 and 35, meaning that Lululemon’s main target market reaching close to 80,000,000 people. Although Lululemon was founded and started in Vancouver, Canada, and there are stores located nationwide, the main target is the United States and more specifically the East Coast. Many consumers are currently located near metropolitan cities. Secondary locations that Lululemon puts focus on is upscale suburban communities. These areas are usually where you will find the majority of upper-middle class hard working people between the ages of 18 and 35. A high number of people have been found living in urban areas where Lululemon retail stores are typically placed within urban shopping malls and districts.
Lululemon has followed the strategy to provide an “enhanced experience” to its customers. Robin Lewis wrote in the “Robin Report” that “brands like Lululemon affects the customers neurologically by providing elevated experience to the customers. Hence, the customers get addicted to the shopping the tons of stuff from the brand”. They set a brand value by producing high-end athleisure clothing line. They target customers who put comfort and quality before the price of the products. This way they have created loyal customers who feel pride in wearing Lululemon merchandise. There is always a rush to get the latest designs as everything sells fast and doesn’t repeat at Lululemon’s stores. So, when the customers buy new products on Lululemon stores, they always feel that they have accomplished something. Also, the customer service at Lululemon is phenomenal, the store educators help customers in selecting the best fit clothes as per their personal needs. Customers feels so attached to the brand that don’t even budge by the minimal discounts offered by the Lululemon store. They are even ready to pay in full to buy their most preferred comfort clothes.
Mindset /Community Strategy
Lululemon focuses on creating a community by bringing together like-minded people. They organize Yoga classes, Meditation classes, and form Run groups for their customers and staff on weekly basis. The customers visit the store to attend these events and meet other members of the Lululemon community, this promotes the feeling of belonging among the Lululemon customers. There are Lululemon ambassadors and educators present in every store who engage in quick conversations with the new/existing customers. They motivate the customers to follow a healthy lifestyle and teach the customers benefits of yoga and exercise. Newsworthy online magazine writes “This loyalty program gives the consumer incentives to build an in-store relationship with the brand while taking part in the interactive retail experience.”
The ambiance in the store is created to promote conversations. The stores are designed in way that the customers feel welcomes there. The store designs are inspired from the local community and makes a big statement about how much Lululemon respects the community they are joining. Julia Brunzell, Manager of Store Design at Lululemon atheletica told the MiND Magazine how they continually analyze the store and the product visibility. She also said that Lululemon uses the feedback from the stores about guests experience and how it could be improved for the customers. All these factors enhance their shopping experience at Lululemon stores and always makes the customer to come back and buy more stuff to get the same feeling.
Lululemon uses direct marketing tactics by sending emails to potential customers. This marketing is effective and less expensive when the company wants to market a new product to the customer. In addition, lululemon also applies marketing strategies through social networks, updates information about products regularly and receives feedback from potential customers immediately. The company uses traditional sales channels through network of stores and through e-commerce systems. In addition, lululemon incorporates sales channels through local businesses. The company works with community coaches as brand ambassadors, creating team programs trained by coaches in yoga studios and sports centers under lululemon support. However, these groups buy lululemon products with a minimum of different quantities and colors stipulated by the company to join the program. Lululemon uses public relations to build a good image for the company through press channels, sponsorships and special events. The company also works with sweat leaders to improve lululemon’s image. At the same time, the company sponsors Olympic experts, coaches, sports club leaders to thank them for spreading their enthusiasm for their practice to the community. Lululemon’s growth strategy focuses on investing in new technologies for CRM management software and the company’s website. Besides, the company also focuses on global growth strategy with market expansion to Asia, especially China. Lululemon will also bring the e-commerce business system to Japan and Korea. The company also continues to grow in Europe and other countries such as Stockholm, Sweden . Lululemon is a company that provides product-base so it is easy to add new products to existing markets. New types of sports products have been expanded. New products are worn in the foot to measure heart rate, footsteps, walking distance as well as the amount of calories burned.
Limited Edition Products:
Lululemon unveiled a special capsule collection adorned with exactly the sort of hippie-dippy, life-affirming mantras you’d expect from a retailer that stocks kombucha on tap for its customers. The collection is comprised of some of Lululemon’s most popular — and bestselling — men’s and women’s technical garments, each of which has been tweaked to feature reflective Lululemon branding or an embossed print that shares the company’s redesigned word-collage manifesto. The inspirational expressions cover limited-edition, sweat-wicking sports bras, leggings, T-shirts, and hoodies for women, and training shorts for men. If you’re after a more subtle look, there are products that are simply emblazoned with Lululemon and the anniversary collection’s name, 9818–20Y. A reversible mat and water bottle are also part of the offerings. The items are coated in a color palette of black, red, grey, and navy. The capsule line starts at $62, and is now available for a limited time in stores and online. To celebrate two decades in business, Lululemon is also hosting yoga events in China, Japan, and here in Vancouver with the annual Seawheeze Half Marathon and Sunset Festival. Lululemon is stepping into the beauty industry with its latest move: the cult yoga brand launches its debut beauty line. In focusing on workout beauty, Lululemon is tapping into a growing industry limited- edition trend for gym-friendly makeup and skincare products.
Challenges that lululemon may encounter.
The Stores in the United States have become very tired : Currently the price and product quality of lululemon tops the fitness wear market. However, the system of stores in the United States accounts for 75% of the market share, which has become very tired, not commensurate with the price of products. This may lead to loss of customers to competitors with lower product prices.
Needs to have a plan for International brand awareness: Lululemon has a growth strategy to expand its market share to the world with the majority in China. However, recently the trade war between the United States and China has happened, no one can predict the future. Also with the Brexit, there are many risks of high-priced luxury products hitting this market, and it is not suitable for lululemon at this time. It will greatly affect the business results set by the company.
The target of double growth for Lululemon’s male products : Lululemon’s strength is a sport product for woman. However, lululemon’s upcoming growth plan is put into products for men. This market share is now the strength of competitors such as Nike and Armor. According to statistics, now men’s sale from women buy for their man about 40% of fitness products. If lululemon wants to be chosen by the woman at the same time to buy them, the lululemon shop system must have an exclusive space for men, and for women on one side. However most lululemon stores are currently designed for women only. And lululemon has no plans to do it currently.
Too many Competitors in the same market: There are too many brands that are already pooled into the same line of market, creating very tough competition almost all time for Lululemon. Biggest competitor being the Under Armor, Nike, Adidas, Zella, Athleta. Under Amour is known to customers for its stretchy clothing that is worn undershirt to workout. Zella offers products similar to lululemon but the quality and price are cheaper, suitable for the average customer. Nike is known as a global brand and spends a lot on advertising and focuses on athletics and shoes. Adidas is known as a brand for soccer with a large global market.
Target User market: Lululemon only provides products for customers aged 16 to 35 for both men and women. However, on this day customers buy goods through online channels significantly increased. If customers don’t see this out-of-age product on lululemon’s online channel, it’s easy for them to switch to competing online sales channels. If they deviate from the targeted user selection, they would have huge competitors.
Solid Products: Lululemon stays solid on its product and this makes the customer feel good. But if other competitors enhance the quality of their products, target on young women groups or create strong, fashion yoga products line, it will be hard to be the best one to choose on the market later. And it is also a problem for Lululemon to keep maintaining the high quality of products in future if Lululemon trying to expend in the marketplace. Lululemon will face the problem which both trying to save costs and keeping their strong quality of products.
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